The debt collection process is influenced by multiple factors such as regulation and consumer trends. Utility debt collection is further complicated by regional rules due to weather patterns and other factors unique to the field. Such volatility means day-to-day processes must possess the ability to adapt at the drop of a thermometer.
“There are heating and cooling moratoriums during which time a consumer cannot be disconnected for non-payment,” said Karen Jonas, vice president national accounts – Utilities at I.C. System. “Generally, it is the utility’s responsibility to monitor, but collection agencies have to understand the impact and accommodate these. You really have to be able to change as fast as the weather. A good collection agency partner will be adaptable in tough or unforeseen situations by stopping the collection process to those affected areas, of course always in collaboration with their utility client.
“Profitability is a genuine challenge with utilities portfolios that are impacted by weather events. An agency with direct, relevant experience dealing with these events can make a difference in maintaining a long, mutually beneficial partnership between the utility and a collection agency.”
Other challenges specific to utility collections are no more predictable than the weather but slightly closer to the norm of collection challenges.
“Utilities collection projects bring unique challenges - including managing inconsistent placement volume due to client moratoriums, communicating reconnect requirements, linking new charges to existing accounts, and data sharing inconsistencies,” said Jonas. “While not all of these elements are specific to utility collections, in aggregate, they increase the complexity of utility portfolios.”
Given the number of moving parts in utility collections, special tools must be used. Not only does it seem these new tools are being implemented on the collection agency’s end but recently have been implemented on the utility client’s end as well.
“We are seeing a trend of utility clients implementing new structures and processes to manage their collection agency partners,” said Jonas. “Many are utilizing middleware vendors to help meet the needs of increasingly complex projects. Some examples include requirements for more organized and granular debt segmentation (primes, seconds, tertiary, etc.), submission strategies and requirements for champion/challenger competition among their vendors.”
There are several lynch pin items that if not properly addressed could guarantee failure in utility collections. Lacking an understanding of how to handle grace periods, government assistance and moratoriums can cause considerable damage to collection efforts according to Jonas. Relationships with clients and proper handling of their brand are also worth great consideration.
“Failure could also be guaranteed if the agency does not pay heed to brand sensitivity,” said Jonas. “A zero-complaint policy is critical to maintaining a great relationship with your utility client. Most recently, this includes understanding how to be compliant with TCPA legislation.”
Advances in technology, while generally good, do slowly give way to gaps between various clients and agencies depending
on the age of the tools they use.
“When we started working with utilities, we noticed how some had older, antiquated computing environments,” said Jonas. “As mergers and acquisitions took place, disparate systems needed to function together. Middleware vendors often allow utilities to share data that system constraints prevented. We have worked with a number of middleware companies for nearly a decade, and provide expansive expertise in this area. Having this experience reduces our new client onboarding to 30 days or less on average, which by some estimates is one third of the industry standard.”
Once all oddities associated with utility accounts are identified and addressed, a healthy collection process is what will bring efforts to a desired outcome. According to Jonas this process includes proper evaluation and handling of the accounts.
“Some of our best practices include smart segmentation of the number and length of collection tiers, the use of champion/challenger plans supported by scorecards, and generous usage of financial counselor (collector) bonus/incentive plans,” said Jonas. “So, my advice would be to take the time, and do the research to truly understand the unique elements required for utility collections.
“Experience can be tough to come by, but do not underestimate what you are already doing for clients in other markets, because they have some of the same concerns including the increasing brand sensitivity and need for compliant operating processes and procedures.”
Differences aside, the foundation of utility collections relies on what makes the best collection professionals successful: the understanding of client needs and the persistent legal means to meet those needs.